Edited by Frederick M. Abbott, Carlos M. Correa and Peter Drahos
Chapter 4: Rethinking the patent system from the perspective of economics
Pro-patent policy makers generally propagandize the patent system as an effective institution to stimulate innovation, facilitate technology dissemination, promote trade, and enhance competitiveness. However, by granting exclusive property rights, the patent system stimulates innovation, but it may also cause monopoly, which in turn results in the loss of social welfare and may impede the use and development of the patented technologies by others. Therefore, the overall role of the patent system in promoting economic development, especially for developing countries characterized by a generally low technology level, is rather ambiguous. Next, I briefly review the basic economic theories behind the patent system and the arguments for and against it put forward by many economists, followed by an introduction of some patent related economic studies and their implications for current patent institutions in developing countries. To conclude, I summarize some suggestions for policy makers in developing countries on designing and improving their patent institutions.
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